A video of the incident was posted on Facebook by Ikorodu Ambassadors.
The man who was stripped to his trousers could be seen bleeding from his eye region.
According to Ikorodu Ambassadors, the incident happened at Ijede, Ikorodu area of Lagos state.
Some of the residents, who were heard speaking Yoruba, insisted that he should be burnt but some pleaded that he should be spared.
The video also showed residents questioning him over a piece of paper found on him containing phone numbers.
The suspect said that he was sent on an errand by his boss who is an artiste and the phone numbers should be called for verification.
Members of the dreaded group had killed over 26 residents of Ikorodu community in the last one year, police say.